Rising oil prices and US Treasury yields may increase short-term stock market volatility, but selling stocks is not recommended as long-term inflation expectations remain relatively stable, corporate earnings and economic activity are improving, and third-quarter earnings reports are expected to restore market confidence. The current environment may be more favorable for value stocks, especially as the earnings advantage of growth stocks relative to value stocks begins to peak. In short, high oil prices and high yields are causing disruptions, but they have not yet changed the fundamental support for stocks. (The above views are from a JPMorgan report dated September 15th.)
